Socialism, American Style

Socialism has come to Wall Street, borne on the back of an elephant. Nouriel Roubini writes:

“Tenth and final point, so what is left as the only solution is the outright formal or informal nationalization of the U.S. financial system. That effective and creeping nationalization is already underway with the variety of actions that the Fed and the U.S. Treasury have taken and that we described above. So this is the paradox of this U.S. administration: it was so rabidly and ideologically free-markets oriented and averse to any sensible regulation and supervision of the financial system that its policies of being asleep at the wheel caused the biggest asset bubble and credit bubble (not just in mortgages) in U.S. history. And now the unavoidable bust of this bubble is going to force an effective nationalization of a good chunk of the U.S. financial system as no one else but the government can do the job.
This is what the free-market ideologues at the Fed, Treasury and White House have now become – especially after the bailout of Fannie and Freddie’s shareholders, management and bondholders – Comrade Paulson, Comrade Bernanke and the Bolshevik Great Leader Bush. But then their whole approach and ideology has always been not one of free market capitalism but rather one of privatizing gains and socializing the losses; or socialism for Wall Street, the rich and the well connected. So they will now get what they deserve and worked so hard to achieve: a nationalization and bailout of the U.S. financial system.”

The original article is behind a paywall here. I got this quote courtesy of the TickerForum, which is proving to be an interesting site for open-minded folks to find opinions & information about the true state of the markets.

Anyone who believes that only Democrats have socialist tendencies is fooling themselves. The Republicans rail against too much welfare for the poor, but their actions prove they are all for it when it comes to large financial institutions and the elite. Banks that are deemed “too large to fail” give themselves free reign to aggressively go after any sources of revenue they can, knowing full well that their paid lackeys in Washington will rescue them from their own greed. Private profits, public bailouts. Rich suits take home the bonuses, while you and I pay for their misdeeds. Moral hazard be damned.

If you didn’t see this, the SEC Has recently passed emergency rules preventing ‘naked’ short selling against the stocks for a limited number of financial firms. What is interesting is both the firms that are on the list as well as those that are not. Goldman Sachs, JP Morgan, Citibank are among the protected, while some of that banks that are known to be in serious trouble (Wachovia, Washington Mutual) are not. Some sacrificial lambs being offered up perhaps? Or maybe a sign that those troubled banks are on the list to follow Bear Stearns in being absorbed by one of the protected giants? We’ll have to wait and see…

There are a few politicians in both parties that are standing up to this bailout policy, but they are few & far between. Both parties will do what they can to keep the status quo viable for as long as possible, and as a result they will be putting the financial screws to us and future generations. Money talks in the US electoral process, so those with the cash are (and will continue in the future) to reap the most rewards. The slow bifurcation of the USA continues.

With few exceptions US electoral races are two-party affairs, at least at the national level. As long as both parties are financed by big business and the wealthy, ordinary citizens will have no real options to try and fix things. We are sold either fear or hope, yet too often after the votes are tallied we seem to have bought business as usual. As long as this persists, I don’t hold much hope that we will be able to change things for the better.